Quick answer
Ask for one written schedule that separates purchase and transfer costs, tenant balances, transfer-date apportionments, ongoing ownership costs and possible dispute costs. Every line should state the amount or calculation, assumption, payer, recipient, due date, refundability, supporting evidence and who must approve a change.
Key takeaways
- Record whether the transaction is assumed to attract transfer duty or VAT and why.
- Separate conveyancing, bond, Deeds Office and finance costs from tenant cash flows.
- Reconcile rent, arrears, prepaid rent, deposit and accrued interest at transfer.
- State municipal, levy, management and utility apportionment dates.
- Price inspection, repair, compliance and vacant-occupation assumptions explicitly.
- Obtain a separate scope and estimate for disputes, Tribunal work or eviction.
How to use this guide
Do not assume the property attracts transfer duty rather than VAT, and do not treat the tenant's deposit as part of the seller's ordinary proceeds. A tenanted purchase needs both a conveyancing statement and a landlord handover reconciliation.
1. Start with the transaction-cost layer
Ask the conveyancer or relevant provider to itemise:
- purchase price and deposit under the sale agreement;
- transfer duty or the stated VAT treatment;
- transfer attorney fees and disbursements;
- Deeds Office charges and deeds searches;
- bond initiation, valuation, registration and cancellation amounts where applicable;
- municipal clearance advances;
- body-corporate or homeowners' association clearance amounts; and
- inspection, valuation or compliance-certificate costs.
The buyer transfer-cost guide explains generic buyer charges. For this article, the important step is connecting those charges to the tenant and handover schedule.
2. Confirm transfer duty or VAT
SARS guidance distinguishes transfer duty from VAT: a property transaction is ordinarily subject to one or the other, not both. Do not assume that an income-producing property automatically qualifies for a particular VAT treatment. A rental-enterprise or going-concern analysis depends on the seller, purchaser, enterprise and transaction facts.
Ask for the assumed treatment, legal and tax basis, amount, filing responsibility and consequence if the assumption changes. Link the answer to finance approval and the last date on which the buyer can respond.
3. Reconcile tenant balances separately
Prepare a tenant account as at an agreed transfer date:
| Tenant item | Written explanation required |
|---|---|
| Rent | Amount billed, paid, prepaid or outstanding and the cut-off date |
| Arrears or credits | Source entries, concessions, disputes and intended treatment |
| Deposit | Original amount, current holder, account evidence and transfer mechanism |
| Deposit interest | Rate or account evidence and balance at handover |
| Utilities | Meter or billing cut-off, deposits, arrears and reconciliation owner |
| Deductions | Legal and contractual basis, evidence and approval status |
The Rental Housing Act regulates receipts, interest-bearing deposits, inspections and deductions in residential rental matters. Use the lease-deposit dispute guide where figures are contested.
4. Record transfer-date apportionments
The sale agreement should explain how rent, rates, levies, management fees and other recurring amounts are apportioned. Ask which date controls: signature, occupation, registration or another agreed date. Confirm who collects rent during the registration month and who communicates new payment instructions to the tenant.
Prevent double collection and fraud by requiring verified bank-detail change procedures. A tenant should not receive conflicting payment instructions from the seller, buyer, agent and conveyancer.
5. Price ongoing ownership costs
Record recurring costs that will continue after transfer:
- municipal rates and service charges;
- ordinary and special levies;
- managing-agent or rental-platform fees;
- building and landlord insurance;
- maintenance, security and compliance work;
- accounting and tax administration; and
- periods of vacancy or non-payment assumed in the budget.
For sectional property, distinguish ordinary levies, special levies and any amounts needed for clearance. Scheme rules and body-corporate decisions can also affect the cost of pets, parking, alterations or use.
6. Allocate repairs and condition costs
Ask who pays for disclosed defects, tenant-reported repairs, damage identified at inspection, compliance certificates and work promised before transfer. Link each amount to the lease, sale clause, inspection evidence and completion date.
Do not rely on the property-condition disclosure form alone. Where a property practitioner is involved, that form is important, but it does not replace an independent inspection or decide the tenant's contractual rights.
7. Separate dispute and vacancy contingencies
If arrears, deposit deductions, access, repairs, cancellation or vacant occupation is disputed, request a separate estimate for advice, correspondence, Tribunal work, mediation, court proceedings, sheriff charges and necessary experts. Do not hide these amounts inside ordinary conveyancing fees.
Ask the practitioner to state the scope, assumptions, hourly or stage rates, disbursements, VAT treatment, approval threshold and what happens if the matter expands. The Legal Practice Council's code requires competent service and reasonable fees, but no estimate can guarantee the duration or outcome of a dispute.
8. Use a change-controlled written schedule
For every amount capture:
- description and category;
- amount, estimate or formula;
- VAT inclusion or exclusion;
- payer and recipient;
- due and apportionment dates;
- supporting invoice, ledger or clause;
- refundability or cancellation effect;
- assumption and uncertainty;
- owner responsible for confirmation; and
- written approval required for a change.
Compare the schedule with the tenanted-property document checklist and the existing-tenant purchase overview. A cost is not explained merely because a total appears on a quotation; the buyer needs to understand what triggers it and how it connects to transfer and tenant handover.
FAQs
Will I always pay transfer duty on a tenanted property?
No. A property transaction is ordinarily subject to either transfer duty or VAT, not both. The correct treatment depends on the transaction facts and should be confirmed before commitment.
Is the tenant's deposit part of the purchase price?
It should be reconciled as tenant money under the lease, including accrued interest and custody. Ask how it will be transferred and evidenced at handover.
Are eviction costs included in conveyancing fees?
Usually they should be scoped separately. Ask for a written estimate covering advice, correspondence, Tribunal or court work, sheriff charges, experts and disbursements.
Should rental income be treated as guaranteed from transfer?
No. Verify the lease, ledger and disputes, then use documented assumptions for collection, vacancy and expenses rather than treating projected yield as guaranteed.
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Source notes
Legal note
This article is general legal information for South African readers. It is not legal advice. Speak to a qualified legal professional about your specific facts before taking action.